Recent literature has dealt with possible interactions between education policies and skilledmigration. For example, Justman and Thisse (1997) and Poutvaara (2004 and 2008) show that labour mobility reduces the incentive for national public funding of internationally applicable education; Egger et al. (2007) analyze the incentives for national governments to provide higher education in the presence of migration and argue that international coordination tends to increase public education expenditure compared to non-cooperation; Mendolicchio et al. (2009), dealing with a two-sector economy with a sufficiently large difference between total factor productivities, demonstrate that education subsidies in the low skill sector increase expected total surplus, while subsidies in the high skill sector reduce it. More relevant to this paper, Stark and Wang (2002) show that migration, by stimulating human capital formation, could be a good substitute for education policies. So by controlling migration rate, government can target optimal human capital without any need to subsidize schooling. Docquier et al. (2008) construct a more general framework realistically allowing for distortions and costs connected to both controlling on emigration and handing out and financing education subsidies. In their model, the result of Stark and Wang (2002) holds when tax perception costs are higher than emigration control costs; when instead taxation costs are lower, optimal emigration is zero and the optimal education subsidy is decreasing with migration rate (this happens also when emigration rate is exogenously given). In this latter case skilledmigration turns out to curb human capital accumulation so that, as Docquier et al. (2008) conclude, “the beneficial brain drain hypothesis hardly resists a normative analysis”.
There are a variety of approaches to understanding the reasons for high skilledmigration. Neo-classical economic and growth theory tend to focus on the importance of scarcity, choice and market relations defining supply and demand. In this context migration is the product of the aggregate effects of choices of rational individuals seeking the most advantageous result for themselves and their families. In developed economies rational actors cluster toward higher paid, higher value jobs. This then allows foreign labour to move toward places of high labour demand where there are wage differentials between countries. The propensity for migration then is simply shaped by the potential for employment and the differential wage rates between countries (Massey et al., 1994). Other factors are also important in allowing markets to work in this way, such as information flow to bring demand and supply together. High skilledmigration is simply an extension of this where scientists and academics from the developing world move to the developed world to take up posts that either cannot be filled because of a skills shortage (where markets have failed to incentivise domestic skill production). Since individuals do not make rational choices in perfect market contexts, other factors may also shape their decisions. For instance, labour migration may also be part of household strategies for diversification or coping strategies allowing calculations of the likelihood and potential scale of remittances to also enter the equation. The basic thrust of the argument, however, is that differential – segmented – markets create push/pull factors which shape the migration decisions of rational actors seeking to maximise their own position.
sources, we find that if the link is strong enough between human and physical capital and/or individuals are suffi- ciently mobile, then taxing one type of capital in favor of another may lead to (more) harmful disincentive effects and may even reduce the overall tax revenue of the gov- ernment; the possibility that a change in the tax rate on physical or human capital may lead to spillover effects, which can have positive or negative repercussions on the residual capital, can also not be ruled out. 4 We show that in its effort to maximize the welfare of its constituents, a government will face inevitable human capital loss as a result. Optimal policy dictates that the government maximize welfare of non-migrants at the expense of this select cohort of highly skilled workers; as such, the loss of individuals at the upper end of the human capital lad- der is simply an unfortunate byproduct of a self-inter- ested government. 5 Therefore, while governments may vow to do something to stem the flow of their “best and brightest”, the financial pull of increased revenues ap- pears simply too great to imply anything other than lip service, when general equilibrium effects are considered. The reason for the outcome is that a marginal increase in labor taxation, culminating in some skilledmigration, is less detrimental than a marginal drop in public goods, which would manifest if no tax increase were enacted. Given this, we find that it is indeed advantageous to have a restriction on capital lobbying for countries that bleed top talent (i.e. experience negative political economy externalities) and it can go a long way in mitigating the implications that this two-sided capital levy problem has on skilledmigration.
This research analyzes the connection between highly skilledmigration and several determining factors such as migration networks, the prestige of academic institutions and the Gross Domestic Product per capita. The linear regression method has been used to analyze a sample of 207 countries, 25 receiving countries and 182 sending countries from 6 different regions (Africa, Asia, Europe, North America, Central and South America and Oceania). A global analysis including all the countries of the sample and a partial analysis by each world region of origin has been performed. The results at global level showed that migration networks and the prestige of academic institution explain the number of highly skilled immigrants very well. In this sense, prestigious academic institutions of receiving countries imply economic incentives and benefits for skilled migrants. Further, relationships and linkages become an important help for highly skilled migrants. Thus, both would act like external and internal networks attracting highly skilled migrants. Regarding the partial analysis, these factors were also relevant for explaining highly skilledmigration, but the results varied depending on each region. In case of Africa and Central & South America, the relevant factor explaining the highly-skilledmigration was the prestige of academic institutions of the receiving countries. However, in the regions of Europe, North America, and Oceania results were similar to the global analysis. In Asia all factors were significant.
Lithuanian highly-skilledmigration has been ana- lyzed by Lithuanian authors since the last decade of the 20th century (see Stankūnienė et al, 1996). First big mi- gratory flows after 1990 were interpreted mainly as eth- nic migration or repatriation of Russian, Belorussian, Ukrainian, Jewish, and other people to their home coun- tries and was mainly related to the political changes in Lithuania. Later with the opening boundaries to the West big emigration of Lithuanians directed to the West coun- tries arose though it could be traced only by some facts provided by foreign immigration offices and unofficial papers. Lithuanian emigration with its negative points as “brain drain” attracted increasing attention of Lithuanian researchers: studies with the focus on its determinants were carried out by some authors (Jucevičienė et al, 2002; Ruzgys, Eriksonas, 2004; Antinienė, 2005; Gečienė, 2005, etc.). There is little attention to the social context as to how social ties and networks act in he proc- ess of highly-skilledmigration because usually socio- economic factors come to the fore. Although social net- works were deeply analyzed in the study on Lithuanians emigration to Chicago (Kuzmickaitė, 2000), there was lesser attention to their role in the emigration of people with the higher-skills.
High-skilledmigration has always been given priority and even encouraged by international and national policy. At the same, international agreements for low-skilledmigration tend to restrict it. Human capital is considered valuable according to educational levels and working abilities, which puts undocumented mi- grants in a difficult economic position. The NAFTA area is no exception: while the migration of profes- sionals is given priority by mechanisms like the TN and H1 visas, there is still no agreement to relieve the situation of unskilled immigration across the border from Mexico to the US and Canada in search of a better life. At the same time, migration between Canada and the US is much freer, even though profes- sionals are also given priority; after NAFTA, Canada has even experienced brain drain to the US. The main question is how to reduce unfair differences in policies that prioritize the mobility of certain indi- viduals based on their qualifications. Method: This paper analyzes and compares NAFTA’s impact on policies for high- vs. low-skilledmigration. It also uses the author’s ethnographic studies to express the view of migrants on how human capital should be managed internationally.
The economic effects of these migrant flows come from changes in skilled labour forces and, because the migrants tend to be younger than the average age in destination regions, these imply associated changes in non-working aged dependency ratios. The labour force effects are illustrated in Figure 7 and detailed in Table 9. The professional labour forces of Western Europe, North America and Australia are raised by between a tenth and a quarter, while those of the key regions of origin fall. The corresponding effects on aged dependency are smaller, however. Considering that migrants are younger on average than destination populations and that the three-decade increases in the base line destination labour forces are large (Table 6), the 2030 destination non-working aged dependency ratios fall by small amounts - a fraction of a per cent in Western Europe, a per cent or so in North America and nearly two per cent in Australia (Table 10). Clearly, the age distribution effects are modest and expanded skilledmigration is unlikely to be a solution to the fiscal problems associated with age dependency. 31
Estimations for Europe, while consistent with the global picture, also point at important differences, related to its particular experience of immigration, especially the fact of being characterized by low skilledmigration. In the case of high skilledmigration, economic variables seem to play a weaker role than in the case of NA. Tax policy has a smaller impact (i.e. an increase in the top marginal income tax rate from 10% to 35% leads to a 0.11-point increase in migration rate). Still, there exists an inverse U shaped curve. While most variables maintain similar impact as in the cases previously analyzed, high skilledmigration to EU seem to respond more to institutional variables, like business climate. For instance, a 1-point increase in the cost of doing business indicator (i.e. less friendly business environment) produces an increase in the high skilledmigration rates by 0.02 points. The CAR dummy is not significant and its explanatory power is limited. 74
Labor migration is a central feature of the current international economy inducing high attention from both academics and policymakers. The most recent available estimates suggest that by 2000 there were 60 millions migrants (i.e., aged 25 or more) living in the OECD area of which 20 millions are highly skilled migrants (i.e., foreign-born workers with tertiary education). Developing countries are major suppliers of such migration. They accounted for 64.5 percent of total immigrants and 61.6 percent of skilled immi- grants in the OECD. This is 15 percentage points higher than in 1990 (Docquier et al., 2007). An intense debate is taking place on the causes and consequences of such a phenomenon. Thanks to the availability of new data sets on migration, a new generation of research is now able to address empirically various aspects of migration. An important part of this literature focuses on skilledmigration and brain drain.
As regards the actual policy change and its extent, the Commission aims to make the Blue Card the ‘primary tool’ in the EU for admitting high-skilled labour and argues that this goal warrants substantial policy changes that can only be addressed by introducing a completely new directive and repealing the present one. That is, the proposal suggests the mandatory abolition of the parallel national high-skilledmigration schemes that would mean that anyone who falls in the scope of the Directive could only be admitted to the Member State for employment purposes via the Blue Card procedure. In compliance with Article 79(5) TFEU, the Member States would still retain their right to determine the volumes of admission of third-country citizens who come from outside the EU to their territory for employment purposes. However, the Commission has proposed that this right would not apply in situations where the third-country citizen has previously been granted a Blue Card in one Member State and seeks to prolong its Blue Card holder status in the first or the second Member State.
Recently empirical papers on the effect of immigration on GDP have been used the so called “accounting approach”, which consists of analysing the effect of immigration on every component of per capita output (total factor produc- tivity, physical capital accumulation, employment). The paper by Ortega and Peri (2009) adopts this approach and has the merit to find a new way to solve the immigrants’ localization endogeneity problem by using the estimated bilateral immigration flows (without wage differential or other economic determinants of migration). Thus they use 2SLS estimates to analyse the effects of immigration on every component of the per capita GDP function. In particular they show that an increasing immigration leads to: (i) an increasing employment growth (confirm- ing one of the main assumption of the growth model by Dolado, Goria and Ichino, 1994) and (ii) an increasing physical capital growth. They also estimate the effect of immigration on per capita GDP growth finding that a 1% increase in immigrants flows entails about a 1% increase in per capita GDP growth rate. Ortega (2008) by estimating the effect of immigration on per capita GDP and labor productivity (per hour worked GDP) finds that a 10% increase in immigra- tion induced population growth leads to a 3.8% increase in GDP but to a 6.2% and 6.7% reductions in GDP per capita and per hour worked GDP. Felbermayr, Hiller and Sala (2010) investigate the effect of immigrants (by using the stock of immigrants in destination country) on per capita GDP in the host countries. Using a IV cross-section approach and controlling for institutional quality, trade and financial openness they find positive correlation between immigration and per capita GDP: a 1% increase in the migrants stock leads to a 0.22% increase in per capita GDP. Similarly Bellini, Ottaviano, Pinelli and Prarolo (2009) find that the share of foreigners in total population has a positive effect of per capita GDP in EU destination regions.
Two major themes are not included in the proposed priorities for the EU migration agenda: less skilled legal migration and integration. This does not mean that these issues are not important. However, there are good reasons for them to remain a mostly national responsibility for the time being. The cross-border spill-overs for legal immigration are com- paratively smaller than for irregular migration. The reason is that the legal status of those migrants remains non-transferable within the EU at least for the first five years. At the same time, preferences for less skilled immigration are highly heterogeneous among EU member states, not least owing to differences between member states in labour markets and social support systems. Hence, the case for a common policy on less skilled legal migration is cur- rently not pressing. Similarly, while integration problems to some extent have the potential to cross EU borders, they remain a mainly domestic challenge. Furthermore, differences between member states in the composition of immigrant populations, institutional differ- ences not least in education and labour markets, and subtle differences in outlook reduce the prospect for far-reaching EU legislation in this area. Nevertheless, a reinforced European dialogue on the challenges of integration clearly can provide political momentum to national integration policies and enhance their quality through joint learning.
There has been a dramatic shift in the composition of immigrant flows to Australia over the last two decades. Between 1990-95 Australia halved its intake of permanent migrants from 120 thousand per year to around 60 thousand. In something of a “policy backflip” the intake then accelerated again up to an annual inflow of 140 thousand immigrants in 2006. Significantly nearly all of this expansion, of 80 thousand migrants per year, was due to people entering under the skilled migrant category with little change in the family reunion category (Productivity Commission 2006). This rapid change in migrant selection policies towards skilled visas implies an increase in the average skill level of immigrants. In particular, as shown by Birrell et al (2006) there has been a dramatic increase in the net inflow of Professionals, particularly building and engineering professionals and teachers.
Shocks to net migration matter for the business cycle. Using a structural vector autoregres- sion and an estimated dynamic stochastic general equilibrium (DSGE) model of a small open economy, we ﬁnd that migration shocks make an important contribution to the volatility of per capita GDP. Migration shocks contribute to variability in per capita con- sumption and investment, and to residential investment and real house prices. Despite the role of migration, other shocks remain more important drivers of these expenditure com- ponents and of housing market volatility. In the DSGE model, the level of human capital possessed by migrants relative to that of locals materially affects the business cycle impact of migration. The impact of migration shocks is larger when migrants have substantially different levels of human capital relative to locals. When the average migrant has more human capital than locals, as seems to be common for migrants into developed economies, a migration shock has an expansionary effect on per capita GDP and its components.
Regarding the issue of measures for ease of work for HSI, one of the most important aspects of the migration process for highly skilled workers is the visa processing time, which includes the time spent from the submission of the documents until the person receives the corresponding work permit or visa. For example, in the case of the European Union, the average duration is one month, although in Finland and Portugal is even less (OECD, 2011). Handling times can be reduced by introducing online applications for obtaining work permits or work visas, such as the ones implemented in Canada and Australia. In any case there is a correlation between the existence of an online application service and the reduction of processing time (OECD, 2011).
themselves, a market for commercial brokerage has emerged to serve this latent demand. The bro- kerage of skilled labour into Japan is thus a case where a brokerage system has transnationalized. Japanese brokers, taking advantage of the information asymmetries of a rigid Japanese recruitment regime and building on existing relationships with clients, have been able to extend their operations abroad rather than leaving these activities to local brokers in the origin countries of skilled migrants. This closely mirrors the internationalization processes of Japanese manufacturers, which also relied heavily on the services of other Japanese companies and thereby managed to transfer their distinct production regimes abroad (e.g. Hatch and Yamamura, 1996). Similarly, Japanese bro- kers, to satisfy the needs of their Japanese clients, recreate the speci ﬁ c Japanese recruitment regime overseas. The literature review highlighted that perceptions of employability can differ between countries (Tholen, 2015). Indeed, looking at the overseas recruitment fair as the central site of engagement has shown how attendants follow Japanese conventions of appearance and are advised by brokers how to present themselves during interviews. With such overseas recruitment fairs now being operated for several years, some students have begun to see employment in Japan as a realis- tic choice. This might change the way they think about and prepare for employability; for example the value of internships, which are of much lesser importance in Japan. In the same vein, universi- ties overseas have begun to reconsider how they can prepare students better for employment in Japan by looking at language education and curricula. Agents have even begun to work with local universities to offer additional courses in the Japanese language to prepare students better for the recruitment process and eventual work in Japan. In the Japanese domestic context, the Japanese state has compelled the stakeholders to come up with some ground-rules for graduate recruitment. Currently, companies and brokers are only allowed to approach students in their ﬁ nal year, and activities are synchronized as not to disrupt teaching calendars too much (Okudaira, 2017). Univer- sities that allow agents on campus insist on concluding data protection agreements, for example requirements that agents cannot share personal data that was collected for application to one partic- ular company with another company later (interview university career of ﬁ ce). Such ethical stan- dards of engagement, however, have yet to be developed for the conduct of brokers overseas.
As the data show migration outflow from the country reached its peak of 218 000 persons in 1989 immediately after the release of legal restrictions on the freedom to emigrate imposed during the Communist regime. After this massive wave the annual emigration decreased to 45 thousand people in 1991 and since then it has stabilised at a level in the range 50-60 thousands. Of course these figures understate the true scale of emigration because they do not include illegal one. Preliminary Census data provided by NSI in April 2001 show that since December, 1992 when the previous Census took place Bulgarian population have decreased by 514 000 people. The emigration has been one of the main contributors to this decline. For the period December 1992 - March 2001 196 000 persons left the country and 19 000 setlled down in Bulgaria, so the migration balance amounted to 177 000 or about 22 000 people per year. Studing emigration outflows for a longer period of time - 1947-1999, some authors considered, that “an average net emigration of only about 7 000 people per year for a period of 52 years is not exorbitant by any points.” (August Gachter, Bulgarian Emigration and Immigration, June 2001). The fact, that in the last ten years the average net emigration has increased by three times alarms the public opinion and policy makers and concentrated research investigations on identification of intentions for emigration.
Return migration represents another signiﬁ cant example of development lever- age because it brings a human capital gain that might not have occurred had the migrants never left India (Regets 2001 ). Research into return migration has increased in recent years, with return skilledmigration viewed as potentially beneﬁ cial for countries of origin due to the knowledge and skills that migrants bring back with them (Dustman et al. 2011 ; Iredale et al. 2003 ; Kapur and McHale 2005 ; King 1986 , 2000 ; Kumar et al. 2014 ). Whether or how returnees have a development impact are questions often raised in the literature. Various empirical studies have observed that the individual migrant proﬁ le and patterns of migration, together with the socio- economic conditions and structural environment in the home country, determine the level of overseas knowledge and expertise shared on return (Black et al. 2003 ; Iredale et al. 2003 ; Siddiqui and Tejada 2014 ). Other inﬂ uential factors include migrants’ sector and type of professional activity, and the match between their qual- iﬁ cations and the labour market requirements in the home country (Biswas 2014 ; Chacko 2007 ; CODEV et al. 2013 ; Gmelch 1980 ; King 1986 , 2000 ; Kumar et al. 2014 ). Furthermore, returnee contributions depend on the context of return (Cassarino 2004 ; De Haas 2008 ; Iredale et al. 2003 ; Kumar et al. 2014 ). The spe- ciﬁ c location that migrants return to is an important determining factor. CODEV et al. ( 2013 ) show that although Indian returnees might have greater impact in rural areas, their location preferences are guided by the better infrastructure and employ- ment prospects available in urban areas. Thus adequate infrastructure and business and entrepreneurial supports enhance the capacity of return migrants to apply the skills and resources they have gained during their time abroad (Ammassari 2003 ; Black et al. 2003 ; Wiesbrock 2008 ). The receptiveness of community and work col- leagues to new ideas is another important factor (Black et al. 2003 ; Black and King 2004 ; Gmelch 1980 ). A recent study on Indian returnee entrepreneurs shows that while they have the potential to transfer the technical and specialized expertise accumulated overseas, they struggle to deploy the soft skills acquired abroad includ- ing managerial know-how and professional culture (Biswas 2014 ).